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HMV Does Well at Christmas….Picture for CD sales less clear….

HMV have reported Christmas sales that were ahead of expectations. Undoubtedly good news for HMV, itís not necessarily great news for UK music sales, in fact it actually papers over some cracks. Firstly HMVís results also include the book chain Waterstones, which actually performed slightly more strongly than the music retailing division. Secondly, but most pertinently, music is becoming a less important part of the equation: DVDs accounted for 40 percent of the total sales in the Christmas period. Even if music sales are up for the total year of 2004, it will simply be a case of recovering a small amount of lost ground.

Traditional music formats are facing increasingly stiff competition from interactive entertainment such as console games and DVDs. The bottom line is that the record industry is in the midst of becoming a music industry: music revenues are more fragmented than they have ever been. The CD album is still the bedrock of recorded music sales (and will remain so for the forseeable future) but labels which now operate on narrower margins than 10 years ago are having to maximise multiple alternative revenue streams to ensure that they ensure that they stay in the black. And this is against the backdrop of Elvis getting to number one in the singles chart with a little over 20,000 sales when just 8 years ago the average for a number one was over 200,0000 sales.